What the Form Is For

Form 1139 is the IRS's fast-track refund application for corporations (excluding S corporations) that want to quickly recover taxes they've already paid. Think of it as an express lane for getting money back when your company has experienced certain tax-beneficial situations. IRS.gov

Corporations use this form to apply for tentative refunds based on four main scenarios:

1. Net Operating Loss (NOL) Carryback

When your company loses money in one year, you can "carry back" that loss to profitable years when you paid taxes, effectively asking for a refund because those earlier profits are now offset by later losses.

2. Net Capital Loss Carryback

Similar to NOL, but specifically for capital losses (losses from selling assets like stocks or property). You can generally carry these back three years.

3. Unused General Business Credit Carryback

If your company earned tax credits (like research credits or renewable energy credits) but couldn't use them all, you can carry back the unused portion one year to get a refund.

4. Claim of Right Adjustment

This applies when you reported income in a previous year but had to pay it back later under a legal obligation. Section 1341(b)(1) of the tax code lets you recover the taxes you paid on that income.

The key advantage of Form 1139 over a standard amended return (Form 1120X) is speed: the IRS must process it within 90 days, whereas amended returns can take six months or longer. IRS Instructions for Form 1139

When You'd Use It (Late/Amended Scenarios)

Standard Filing Timeline

For the 2019 tax year, you must file Form 1139 within 12 months of the end of the tax year when the loss or unused credit arose. For a calendar-year corporation with a 2019 loss, that means filing by December 31, 2020. However, there's an important prerequisite: you must file your income tax return for the loss year before or at the same time you file Form 1139. You cannot skip ahead and file the refund application without first filing the underlying tax return.

Extended Deadlines for 2019 (CARES Act Relief)

The 2019 tax year received special treatment under the CARES Act. In April 2020, the IRS granted a six-month extension for filing Form 1139 with respect to NOL carrybacks from tax years 2018, 2019, and 2020. This extension was particularly significant because the CARES Act changed the carryback rules for these years. IRS Notice 2020-26

Late or Amended Situations

If you miss the 12-month deadline for Form 1139, you haven't lost your right to a refund—you've just lost the express processing option. You can still file Form 1120X (Amended U.S. Corporation Income Tax Return) within three years from the date your original return was due (or filed, if later). The tradeoff is that the IRS isn't required to process amended returns within 90 days, so you'll wait longer for your money.

You must also use Form 1120X instead of Form 1139 if you're carrying back items other than an NOL to a "section 965 year" (a year affected by the 2017 Tax Cuts and Jobs Act's one-time transition tax on foreign earnings), or if you're claiming a foreign tax credit that was released due to an NOL carryback.

Key Rules for the 2019 Tax Year

The 5-Year Carryback Period (CARES Act Impact)

The most significant rule for 2019 is the 5-year NOL carryback period established by the CARES Act in March 2020. Prior to this legislation, NOL carrybacks were generally limited to two years. The CARES Act retroactively changed this, allowing NOLs from tax years beginning after December 31, 2017, and before January 1, 2021 (which includes 2019 for calendar-year corporations) to be carried back five years instead of two.

This means a 2019 NOL could be applied to tax years 2014, 2015, 2016, 2017, and 2018, potentially generating substantial refunds from those profitable years. The carryback starts with the earliest year first (2014), and any unused loss rolls forward to the next year in the sequence. IRS Instructions for Form 1139

Section 965 Year Complications

If your corporation had a "section 965 inclusion" in 2017 or 2018 (related to the deemed repatriation of foreign earnings), carrying back an NOL to those years triggers special rules. When you carry back an NOL to a section 965 year within the 5-year period, you're deemed to have made an election under section 965(n), which can affect how the carryback is calculated. The IRS has issued specific guidance on this complex situation.

Carryback Order and Limitations

NOLs must be applied to the earliest year first in the carryback period unless you elect to waive the carryback entirely and only carry the loss forward. For 2019, you cannot selectively apply losses to only certain years while skipping others—it's all or nothing on the carryback.

Capital Loss Carryback Rules

Net capital losses from 2019 can be carried back three years (to 2016, 2017, and 2018) and are treated as short-term capital losses in the carryback year. However, you can only carry back the capital loss to the extent it doesn't create or increase an NOL in the carryback year.

General Business Credit Carryback

Unused general business credits from 2019 can generally be carried back one year (to 2018), with exceptions for certain specific credits that may have different carryback periods.

Step-by-Step Filing Process (High Level)

Step 1: File Your 2019 Tax Return First

You must file (or have already filed) your 2019 Form 1120 or applicable corporate return before submitting Form 1139. The IRS requires this to verify the loss or credit you're claiming actually exists.

Step 2: Gather Required Documentation

Collect copies of: the first two pages of your 2019 tax return; all schedules showing the loss or credit (Schedule D for capital losses, Form 3800 for business credits); any election statements; and the original returns for the carryback years (2014–2018 for NOL, 2016–2018 for capital loss).

Step 3: Complete Form 1139

Fill out the form's header section with your corporation's identification information. In Part I (lines 1a–1d), specify what you're carrying back—NOL, capital loss, unused credit, or other adjustment. In Part II (lines 11–28), you'll create a multi-column computation showing the tax calculation for each carryback year before and after applying the loss or credit. This requires refiguring income, deductions, and tax liability for those earlier years.

Step 4: Attach Supporting Forms

Include copies of all forms that generated the carryback (your 2019 Schedule D if claiming capital loss carryback, Form 3800 for credit carryback, etc.). Attach recomputed forms for the carryback years showing how the tax changes with the loss or credit applied.

Step 5: Mail to the Correct Service Center

Form 1139 is never filed with your tax return—it goes separately to the IRS Service Center where your corporation files its income tax returns. Check the IRS website or your return instructions for the correct mailing address.

Step 6: Wait for Processing (Up to 90 Days)

The IRS has 90 days from the later of either (1) when you file a complete Form 1139, or (2) the last day of the month containing your return's due date (including extensions). If you filed your 2019 return by September 15, 2020 (with extensions), the IRS clock starts when they receive a complete Form 1139.

Common Mistakes and How to Avoid Them

Mistake #1: Filing Form 1139 Before the Tax Return

Many corporations rush to file Form 1139 to get their refund quickly, but the IRS will reject applications filed before the underlying tax return for the loss year.
Solution: Always file your Form 1120 or other income tax return first, or simultaneously with Form 1139.

Mistake #2: Mathematical Errors in the Recomputation

The multi-column format on lines 11–28 is complex, requiring you to recalculate taxable income and tax for multiple years. A single math error can cause the IRS to disallow the entire application.
Solution: Use tax software or have a professional double-check all calculations. Show your work on attachments so the IRS can follow your logic.

Mistake #3: Missing Required Attachments

Applications without complete documentation are considered incomplete and may be disallowed. The IRS specifically states that material omissions can lead to disallowance, and you cannot sue to challenge this decision—you'd have to start over with Form 1120X.
Solution: Create a checklist from the “What To Attach” section of the instructions: return pages, loss/credit schedules, election statements, and recomputed carryback year forms.

Mistake #4: Applying Losses in the Wrong Order

Some taxpayers try to “cherry-pick” profitable years by skipping over less profitable ones, but the law requires you to start with the earliest year in the carryback period.
Solution: Apply your 2019 NOL first to 2014, then 2015, 2016, 2017, and finally 2018, even if 2017 had less income than 2018.

Mistake #5: Forgetting to Make Waiver Elections by Deadline

If you want to waive the carryback period and only carry the loss forward, you must elect this on your original 2019 return (or on an amended return filed within six months of the due date). Missing this deadline locks you into the carryback.
Solution: Review carryback versus carryforward strategies before filing your return, and document any waiver election on Schedule K or the appropriate form.

Mistake #6: Sending the Form to the Wrong Address

Unlike tax returns that might eventually reach the right place, Form 1139 sent to the wrong service center can get lost in processing.
Solution: Confirm the mailing address by checking the latest IRS instructions or calling the practitioner priority line if you're unsure.

What Happens After You File

Initial Processing (0–30 Days)

The IRS receives and date-stamps your Form 1139. They check for completeness—are all required pages and attachments present? Is the form signed? Are there obvious math errors? If the application is incomplete, they may contact you for additional information, which extends the 90-day processing clock.

Review and Calculation (30–75 Days)

IRS examiners verify your loss or credit calculation by comparing it to your filed returns. They recalculate the tax for the carryback years to confirm your requested refund amount. This is not an audit—it's a limited review focused on whether the math is correct and the carryback follows the rules.

Tentative Refund Issued (Within 90 Days)

If everything checks out, the IRS issues a "tentative refund." This isn't a final determination—it's provisional. They're essentially saying, "Based on your representations, here's your refund, but we reserve the right to examine it further." For refunds of $1 million or more to a single carryback year, you must attach Form 8302 to request direct deposit.

Post-Refund Examination Period (Next 3+ Years)

Even after you receive your money, the IRS can still audit the carryback within the normal statute of limitations (generally three years from when you filed the return for the loss year, or longer if substantial errors exist). If they later determine you weren't entitled to the full refund, they can assess additional tax plus interest on the erroneous amount.

If Your Application Is Disallowed

The IRS may disallow Form 1139 entirely if material information is missing or uncorrectable math errors exist. Importantly, you cannot sue over a disallowance of Form 1139. Your only recourse is to file Form 1120X within the three-year period and follow the regular refund claim process, which gives you the right to sue if they deny that claim.

Interest Accrual

You'll receive interest on your refund starting from the overpayment date (generally when you paid the tax for the carryback year). However, if the IRS later determines you received too much, you'll owe interest on the excessive amount from the date they sent it to you.

Frequently Asked Questions

1. Can I file Form 1139 electronically for my 2019 loss?

No. As of 2019, Form 1139 must be filed by paper mail. Unlike many other tax forms that can be e-filed, the IRS has not implemented electronic filing for tentative refund applications. You must print, sign, and mail the form with all required attachments to the appropriate service center.

2. Should I file Form 1139 or Form 1120X to claim my 2019 NOL carryback?

If you're within the 12-month window after the end of your 2019 tax year, Form 1139 is almost always preferable because of the 90-day processing requirement. However, you must use Form 1120X if you're carrying back items (other than NOL) to a section 965 year, claiming released foreign tax credits, or if the 12-month deadline has passed. Form 1120X gives you the right to sue if the IRS denies your claim, whereas Form 1139 disallowances cannot be challenged in court.

3. What if my 2019 loss includes both regular business loss and capital loss?

You can claim both on a single Form 1139, but you'll need to carefully separate the calculations. Capital losses can only offset capital gains (not ordinary income) and have a three-year carryback period, while NOLs offset all income and have a five-year carryback period for 2019. Complete separate calculations for each type of carryback and combine the results on the form.

4. Do I need to attach amended returns for the carryback years?

No. You're not amending the carryback year returns—you're showing how they would change if recalculated with the loss or credit included. Attach recomputed schedules and forms showing the changes (like a recalculated Schedule D for capital loss carrybacks), but don't file formal amended returns for those years unless Form 1139 is disallowed.

5. Will filing Form 1139 trigger an audit of my 2019 return or the carryback years?

Filing Form 1139 doesn't automatically trigger an audit, but it does get more IRS scrutiny than a typical return because money is going out the door quickly. The initial review is limited to verifying your calculations are correct. However, the IRS retains the right to conduct a full examination of any involved year within the normal statute of limitations period. Large carrybacks may receive closer attention.

6. Can I claim a refund for state taxes too with Form 1139?

No. Form 1139 is solely for federal income tax. Most states have their own separate procedures for NOL carrybacks and refund claims. After filing your federal Form 1139, check with your state tax agency about whether they require a state-specific amended return or carryback application. State rules often differ significantly from federal rules—some states don't even allow NOL carrybacks.

7. What happens if I made an error on Form 1139 after I filed it?

If you discover an error before the IRS processes the form, you can file a corrected Form 1139 marked "Amended" or "Superseding" at the top. If the IRS has already processed it and issued a refund, but the refund was too small due to your error, you must file Form 1120X to claim the additional amount. If the refund was too large, the IRS will typically discover this during their review and either adjust the refund or bill you for the excess plus interest.

Sources:
All information in this guide comes from official IRS publications including About Form 1139, Instructions for Form 1139, and IRS guidance on CARES Act carrybacks.